Xi Jinping in Europe, a stopover on the New Silk Roads

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Chat on April 4, 2019 organized by the Africa World Institute

Summary written by Mr. Nicolas Klingelschmitt

Speakers :

  • Mr. Christian VICENTY, China/Russia/Ukraine & New Silk Roads Policy Officer at the French Ministry of Economy and Finance.
  • Mr. Manga KUOH, member of the Africa World Institute, Cameroonian, former international civil servant at the World Bank and IMF, author, consultant and lecturer.

The European stage of the New Silk Roads; a Union with dissonant voices

There are divergent positions within the European Union: the project was preceded by MOUs (Memorendum Of Understanding) signed between most of the Eastern European states of the EU, since 12-13 of the 27 states have acceded to these cooperation agreements (trade agreements), others have restrictive positions, expressing doubts or pointing to difficulties linked to the imbalance of bilateral trade relations.

To better understand the growing importance of the exchanges linked to the project, it should be noted that 40 to 50 trains from China arrive in Europe each week, while the means of rail transport remains very little used compared to the seaway between these economic actors.

In this railway sector, Germany and Poland are hubs, terminals for the arrival of Chinese products arriving by rail. If the railways account for 2% of the volume of trade and 4% of the value of trade between Europe and China, this figure could double within the next ten years.

The majority of trade is still by sea, with nearly 80% of trade being carried out through this means. However, China wishes to avoid the dilemma of the Strait of Malacca, a real strategic hub today, and can therefore strengthen other freight transport routes to Europe and the rest of the world.

Currently, it is estimated that there is a 1000 billion investment in the B&R project. Clearly, the world’s pendulum is swinging back towards Asia, and involving Africa and Latin America in a vast rotating movement, also through the Middle East.

From the perspective of the European Union, are we a spectator of this shift in the centre of gravity, launched 6 years ago in 2013, including nearly half the world, benefiting Africa, the Middle East and Asia? Do we want to be part of it?

There is in fact a range of divergent State opinions with regard to the Belt and Road Initiative; Italy has thus, to everyone’s surprise, signed the MOU with China in many areas; 5G with Huawei (the same for Monaco), hydroelectric projects… Italy has thus taken a collaborative position, considering itself to benefit from it, and possibly to reduce the problem of Italian public debt through projects in Africa in which Italy has been historically present. Other positions are in question; Russia cannot keep up in financial terms with the scale of the projects planned, and it can be argued that it is thus deluding itself in its position with regard to the One Belt, One Road Initiative project.

A relatively vague French positioning

As for France, the first State to recognize the People’s Republic of China in 1964, it does not, however, adhere to the project that China is advancing.

The visions within the country are just as heterogeneous as within the European Union; for example, we can identify a post-Maoist vision in France, among former Maoist militants, who consider that the BIS should not exist and is an aberration if we refer to the little red book, even if this vision is obviously anecdotal today, coming from nostalgia for Mao’s communist China.

French public opinion remains generally neutral towards the B&R project, even if we have both pro and anti-B&R extremes. However, overall, there are concerns, particularly about the French government’s lack of a real position on this project.

An inter-ministerial committee had been suggested on this subject in 2017-2018 but it was not finally implemented, so we sail according to the divergent opinions of each other and during this time, even if we announce that China is in recession or in difficulty, the project is progressing, as shown by the many trips of Xi Jinping accompanied by contract signatures (Luxembourg, Italy, Monaco for example). China is not out of breath, contrary to what some of the French press are saying.

The European Commission, in these recent actions, has stated that China is a systemic rival as well as a partner; this does not give the impression of really wanting to enter into negotiations with China, rather it gives the impression of wanting to distance itself and even filter foreign investment in Europe.

In the end, we are in a movement of quasi spectacle where we give the impression of wanting a united position, at least of a few countries (France-Germany), but in reality as soon as we observe the situation more closely, we cannot guarantee that the positions envisaged do not pass through the EU Council, visions very open to a partnership with China opposing very reserved positions.

Paradoxically, France has signed “major contracts” with China, notably Airbus, for an amount of 35 billion, to the detriment of previous orders from Boeing (which are experiencing technical problems as evidenced by world airline news). This does not prevent French foreign trade from being in deficit for nearly 30 years, which is due in particular to the difficulty of having a current and stable trade from solid and stable SMEs that would feed French foreign trade. This saves appearances through these contracts, while maintaining a neutral / restrictive position as was the case during Xi Jinping’s official visit to Emmanuel Macron accompanied by Angela Merkel and the EU representative.

The OBOR / BIS subject may well be criticised, may not work, but the fact remains that this project exists, is progressing, is gaining the support of more and more European States (Malta, Portugal, Italy, Luxembourg…); the problem of French and European positioning thus remains unresolved in the long term.

France has a wait-and-see attitude, and this positioning is problematic insofar as China continues to methodically advance and implement its infrastructures; it is gradually obtaining a hold on the network and industrial standards, which could one day lead it to say that it would have liked to have European States to harmonize these works, but that in the absence of them, China could claim “ownership” over the networks it has set up de facto, it would then be too late for Europe and France to claim control over the networks and platforms that emerge from them.

For the time being, the Chinese authorities wish to share this work, to share this burden of global organisation of the BIS, it could wish to co-invest with Europe and France, in the perspective of the “win-win” advocated by Chinese economic doctrine. If France does nothing, it will have contributed in spite of itself to advancing the Chinese project while complaining about its progress at its own expense.

“We shouldn’t be surprised by the result.”

Mr. Vicenty is in favour of a solution skilfully negotiated with the Chinese authorities. We should work on the hundreds of projects that France manages to capture (about 300 viable projects so far, two-thirds of which are at least $1 billion, of which about 10% of them amount to more than $10 billion) and make them a reality by considering how to organize themselves to reach agreement with the Chinese on a sharing of standards and networks that also satisfies third countries (Africa and the Middle East in particular) so that everyone uses networks in a compatible way, whereas if the Chinese project advances on its own, it will take intellectual property with it, and through the game of recurrent maintenance and technical modernization, would impose its own rules without anyone opposing it, if the “laissez-faire” continues until 2050.

To Mr. Manga Kuoh’s call, the public reacts. Nathalie Kemadjou, a member of the Africa World Institute, took the floor and spoke about Portugal, which is the link between China and Africa within the OBOR project and which trains Chinese maritime operators, recalling the Portuguese government’s authorisation for the Chinese government to invest in several fields and companies. Portugal thus paved the way for European states to sign MOUs with China, at the same time as Eastern European countries, without this being noted at the time. Historically, the Portuguese had been the first Europeans to establish the link with Africa and Asia and to connect them. Italy’s natural affinities with the Middle East, India and China can also be highlighted, since historically, since the Roman Empire, trade routes existed between these geographical areas.

To understand today’s geopolitics, we must never forget the affinities that have existed throughout history, which is set aside by today’s media and experts.

“China builds roads when the United States builds walls”

Jean-Baptiste Gaudin, a business law consultant, notes that China is building roads while the United States is building walls. It then discusses technical issues that can hinder trade between Europe and Asia; the gauge of the rails changes in Kazakhstan, which involves transhipment, the Marmara tunnel, which is closed, and the Istambul-Tehran railway line, which is not very secure (Kurdish question). Finally, the question arises of the opening of the Northwest Passage, and in this case which silk routes for Africa?

Mr. Vicenty returned to this paradox of a historically communist country, China, which was inspired in its Maoist period by Soviet behaviour, and which is building roads today, while the United States of Trump is becoming ultra-protectionist and is starting to build walls. “The walls of China, material or spiritual, total or partial, belong to the peoples who have lost faith in themselves. “(Miguel de UNAMUNO, Bilbao Floral Games, 1901), this is what the West and Europe are experiencing today, as well as the United States. We refuse to accept a change in mentality and we are afraid of change, even at the level of some leaders.

Responding to Mr. Gaudin’s remarks, Mr. Vicenty explained that with regard to track gauge, new technologies will emerge that will automatically modulate the gauge of the “bogies”. With regard to the southern route (Bosphorus, Iran…), China is building trains to Tehran, investing 40 billion for the crossing of Turkey, and gradually consolidating its rail transport lines.

He added that the geopolitical Silk Roads are a form of creeping solidarity between countries towards each other (e. g. China and Iran, countries under US sanctions) which thus escape the usual Western reading of International Relations, as the Silk Roads gradually deepen.

Mr Dominique Saatenang, the first African to have joined the Shaolin Temple and vice-president of the Africa-China Investment Federation, spoke in his turn: he felt through Mr Vicenty’s statements that France could not position itself clearly. He went back to the example of Germany and added that if China wants France’s help and partnership, French communication is unclear and its position is not clear.

Pierre Papon, physicist, former Director General of the CNRS and member of the Board of the Africa World Institute, made some comments that qualified the previous interventions:

First, certainly, the world’s economic centre has been moving towards Asia for 20 years, but Asia must not be reduced to China; we have India and Japan, major players, in particular, who are reluctant to participate in this project[1]. We can therefore understand France’s concerns about Chinese investments, particularly in the maritime sector; and France is a maritime power (which often does not have the means to achieve its ambitions) present in the Indian Ocean and the Pacific, which observes what is happening from this point of view. He recalled that a few years ago, China took possession of the Spratleys and Paracels Islands in the South China Sea and claimed by several neighbouring countries including Malaysia and Vietnam, and based its decision on the ICJ’s refusal to annex it. In addition, oil transport routes are protected by China, which has settled in Djibouti, but also includes France, Japan and the United States. Moreover, its port built in southern Sri Lanka currently has no traffic, at least for the moment (it is in fact a Chinese strategic object “acquired”[for 99 years] in relation to India and the Indian Ocean).

Secondly, it cannot be ignored that there are questions or even concerns about China’s compliance with intellectual property rights, as several French companies have been trapped in this area[2]. Finally, with regard to geopolitics, China’s interest is Central Asia, and its border positions in the Uighurs and Kazakhstan; these data are part of China’s strategy and must be taken into account. The Uighurs issue is also to be associated with respect for human rights, and in particular minorities, by the Chinese government.

Moreover, if we take the example of the free trade agreement between the United States and Europe, we see that it has raised questions about its social aspects (environmental standards, human rights, etc.) and we can raise the same reservations about agreements with China, which must not appear to be a good Samaritan; Chinese aid often comes in the form of loans, sources of public debt (which China, not unaware of the damage caused, tries to “smooth” over time by various means[debt rescheduling, various contract renegotiations, etc.], which is very rarely mentioned by the European and Western media.)

A member of the public also raised the example of Pakistan and the riots that took place there following the first uses of infrastructure set up by China; can we not see communication problems or difficulties in setting up in China ?[3]

Paul Dima, lawyer and member of the Africa World Institute, asks a question: “This BIS project calls into question, takes stock of the upheaval in international specialisation; we have the impression that infrastructures are being built and that we are wondering what will be transported there; our Airbus, our Renault to China ? What can be sold there and at what price ?”[4]

Monet Bardet, a graduate in International Relations, rebounded on the fact that China is a communist state, and asked the following question: “Shouldn’t we be talking about an authoritarian state today in view of its recent transition ?”[5].

Mr Vicenty replied to all these last remarks and questions by confirming that France’s restrictive position may prove embarrassing, particularly with regard to France’s disengagement from Africa; i.e. a current situation that may evolve according to any new trends in power in France in the years to come….

Africa within the New Silk Roads

Manga Kuoh then took the floor and made a transition: Africans had understood that change was always driven by those who thought it would win the race to globalization; when the West was pushing globalization, through liberalism, whose pioneers were the British and Americans, they were sure of their ideas. China is following the same pattern today, and this posture is not new. What we must remember from history is that those who have closed themselves up have rarely won… the Soviet Union is a blatant example, as was China when it was a communist country in the rigid sense of the word, which reversed the trend by opening itself up.

And what about Africa in all this ?

Several elements of reflection are proposed, revolving around the following idea: there is a historically unprecedented phenomenon in the Africa-China relationship over the past thirty years; it is a relationship that is historically singular, but which at the same time gives signals of questioning or uncertainty that are recognizable; in other words, singularity does not necessarily mean innovation.

The uniqueness of the Africa-China relationship

The Africa-China relationship is unique in its genesis, an intense relationship develops but without conquest, without skirmishes, without there being a great moment of distribution or sharing, without the organization and effects of a kind of Berlin conference in 1885. For Africa, it is unusual to have a foreign power approach it and develop so many activities on its territory without conquest by weapons.

The age of relations between China and Africa is always recalled with pleasure in diplomatic circles (Chinese sailors in the 15th century; Bandoung 1955 with a new Asia-Africa partnership). We can refer to these moments in history, but they do not seem to be the strongest explanatory factors for the development of relations between China and Africa over four decades.

Moreover, if we look closely, China has not driven anyone out of Africa. The withdrawal of Western powers from Africa began long before China’s commercial and economic breakthrough in Africa. As early as the 1970s, there were already phenomena of withdrawal, not only from the West but also from the Levant (Syria, Lebanon) and Greece.

The rise of certain national business movements in some countries also played a role. There has been a phenomenon of national ownership of commercial enterprises which, by buying companies, has facilitated the removal of sellers from the economic landscape of the countries concerned.

From an economic point of view, it can be said that China is not going directly to Africa; it will go there in large part because at some point it had already started to conquer the Western market. In other words, if, for example, the textiles traded in Europe came from China, why go through Europe to import them? We are going to bypass the European intermediary with regard to Africa, which is what will accelerate the Chinese breakthrough in Africa; it is pure economic logic, it is not something else. Africans will facilitate this phenomenon, will even play as wholesalers in China to export to Africa, bypassing pre-existing European-African trade networks. This business logic is very important; often, official speeches, including that of the Chinese, do not sufficiently promote it.

As early as 2009, China was already, according to statistics, Africa’s largest trading partner. China-Africa trade has increased 20-fold in 20 years, between 2000 and 2019. His statement was very quick and never before had such an impact.

Finally, China is in business, in investment, but also in culture and politics; we are not just doing “counter” trade. On the political level, China has been able to present itself in a way that calls for nuances. It presented itself as not practicing interference, not giving lessons in terms of human rights, not interested in terms of military establishments (military bases) or macroeconomic rigour.

But is the Africa-China relationship serene enough to remove the uncertainties ?

Uncertainties and risks for Africa already known

We cannot help but notice some uncertainties at the moment. The nature of economic trade (80-90% of African exports remain commodities, including an element of uncertainty related to price, deterioration of the terms of trade, risk of technological change making African production elements obsolete, etc).

Another risk is related to investments, which are a positive factor for Africa, which has no other sources of financing corresponding to its needs. In short, without China many of the investments taking place in Africa could not be realized. However, any investment only has a ripple effect if it is supported (budget for maintenance, upkeep… which often risks being diverted).

Linked to the above is the debt risk, for which various alerts are already visible, providing more than in several countries, the loans granted by China will mature. The Chinese authorities have certainly indicated their willingness to consider debt relief. But in this case, do we not fall back within the same limits from the point of view of the development of African countries as during their period of primordial relations with the West ?

The discourse of non-interference is to be listened to, knowing that the interference does not necessarily have to be noisy or virile. However, in practice, there comes a time when a major power, in order to ensure the security of its people and investments, cannot do without interference or even setting up a military base, as China has finally done in Djibouti. The problem is the form, the delicacy with which the interference is conducted. It is up to China to manage this reality in its own way.

Another point to note is the tensions over land ownership; this tension is not new. Some countries, including Cameroon, have seen that the issue of land ownership has sometimes led to the hanging of certain political leaders (1914 during German colonization). From the moment the economic partner finds himself with the best arable land and local people are dispossessed, problems will inevitably emerge. This must be recognized as an uncertainty in China’s future relations with Africa.

On the cultural level, finally, we observe that there are two China in a way; the official China, diplomats, Confucius institutes, large companies that have a limited agenda in the country to build certain major infrastructures… it is this China that is applauded because the populations have the feeling that these nationals bring something to them on the cultural and geopolitical level.

Then there is another China; China, medium to small businessmen, who bring with them employees, facilitators, who probably come to see and discuss in the field; from very distant geographical areas in China and who have received limited training. In Africa, they find themselves in environments that are mostly urban, often in contact with African elites, with whom they have a huge gap. Their way of life is not compatible with the African way of life and, even less so, with their aspirations. These Africans do not want foreigners who do not “push them up”; they want foreigners to be “a way for them to grow”. We must be aware of the presence of this double China in Africa.

“In football, you need a good coach, a relevant game plan, and the ability to adjust your tactical plan.”

In the economic and diplomatic game currently being played with China, the responsibility and opportunity for action lies with Africans; the ball is in their court. In this situation, as in football, you need a good coach, a relevant game plan, and the ability to adjust your tactical plan according to the evolution of the match.

Exchanges of views and perspectives

This is followed by questions and reactions from the public: with the arrival of Chinese investments, we are witnessing the return of the “white elephants” that we thought we had surpassed; projects that are unproductive, poorly designed and without local beneficiaries; can we not blame local governance for these investments, and the implementation of a scheme that is not very beneficial to Africans?

A member of the public, a Mauritanian doctor of economic intelligence, enriched the debate by pointing out that China has been present in Africa historically since 1960. It has been noticed and remarkable in Mauritania and other countries through the construction of many infrastructures. It is fortunate that Chinese investments are made in Africa; where Westerners cannot or sometimes do not want to invest, sometimes prolonging Africa’s underdevelopment. In recent years, China has been practically the world’s leading economic power, and one of the major military powers, which must also be taken into account.

As for the issue of arable land, it is a delicate one in Africa, and 65% of the world’s arable land is in Africa, knowing that the great battles of tomorrow will be to feed the world’s population. African demography must also be taken into account, particularly with regard to the 2 billion Africans expected in 2050, the balance of power will change according to this demographic pattern. Africans will be predominantly young, while in Europe and Asia, the population is and will continue to age.

Africans must also be trained in the intangible, training and intelligence, to train more powerful and competent elites so that Africa can use all its potential in terms of material and demographic resources.

Mrs Houphouet-Boigny, President of the Board of Directors of the Africa World Institute, raised the issue of the Chinese workforce. Ms Christine Roche also intervened: “Doesn’t China favour the long term by focusing on education ?”

Dr Guy Njambong is interested in the slides of the powerpoint (distributed to participants and available for download following this document) on how roads and networks are created in Africa by China; South Africa and Nigeria are very important in this scheme, Algeria also had an important role, so how this mesh will be considered ?[6]

The question of the informal economy is also raised; could this put a brake on the silk routes ?

Mr. Kuoh answered some questions and comments:

White elephants are a question to be explored. What often generates them is what comes after the investment; the lack of maintenance and follow-up of projects that come out of the ground. The Chinese had a reputation at the beginning for building more or less social infrastructures (e. g. congress centres, Party houses, sports facilities). In terms of productive investments, they are not breaking records in terms of “white elephants”, a priori.

Concerning the question of manpower; this is a problem, but there is a “trade off”; it is a choice. It is often said that as much local labour as possible should be used, but the Chinese often bring in their own labour. The advantage is the speed and low cost of the process. The downside is that there is no training, no transfer of skills. It is therefore necessary to be open to both possibilities depending on the nature of each project; an investment of a certain size can be made in a “commando” way. That said, African teams have sometimes been integrated into major projects and it is therefore important not to have an ideological position that is too strong on this point. The Chinese, at the moment, are not yet in the perspective of long-term training but rather in contributing to education, especially the Chinese language, more and more Africans speaking Chinese, which is rather a good thing, just as at the time when the main partners were French, Africans were learning their language.

Mr. Saatenang bounced back on this, with regard to labour: the China-Africa relationship is not new, as many believe, it has been since the Bandung conference of non-aligned countries held from 18 to 24 April 1955. Chinese investment promotes Chinese companies, which need to develop. These belong almost entirely to the State (but not always, depending on the projects on a case-by-case basis); thus when China provides financial resources, it also wants to contribute to the development of its own companies. It is up to African leaders to negotiate well, to achieve a better balance. However, the elites currently trained are not trained in Africa, do not return to work at home, and the diaspora has a responsibility in the current situation. It should be noted that the only MBA in the top 10 worldwide established in Africa is Chinese, established in Nigeria.

The Africa World Institute thanks the speakers and all the participants in this conference-debate which aroused great interest among its members.

Photos

Explanatory notes :

[1] Ch. Vicenty: knowing, however, that India’s position is ambivalent[is part of the 106 Member States of the BRI/OBOR zone and does not want to completely alienate its relations with China, with regard to those maintained with the United States, Japan, France…] and that Japan, up to the level of its current Prime Minister, Shinzo ABE, also has questions about a possible “rapprochement of interest” of Japan with regard to the BRI/OBOR project…

[2] Ch. Vicenty: No one is fooled, of course, by the difficulties associated with the enforcement of intellectual property in China and by China. However, China is innovating more and more, investing massively in R&D (currently about 2% of Chinese GDP, which could rise to 2.5% of GDP in the next few years) and as part of the qualitative transformation of its economy (see “Made in China 2025“, extensible to 2050 de facto…), filing more and more patents, defending its brands more and more strongly (see HUAWEI’s emblematic example...). Given that China is increasingly relying on the advent of breakthrough technologies (robotics, artificial intelligence, autonomous and electric vehicles, new and renewable energy, etc.) to “make a difference” in quality and competitiveness with the West, it can be assumed that in the more or less near future, as happened before in Japan and South Korea, for example, China will no longer need to resort to counterfeiting and intellectual property violations to catch up….; On the contrary, it could become a provider of cutting-edge technologies for the West, disseminated in particular through the connected and multimodal network of the new Silk Roads (BRI/OBOR); this makes it possible to understand to what extent American economic intelligence is concerned about this evolution and multiplies in this sense critical and sceptical analyses on China and its projects through articles, studies and media, analyses often relayed by equivalent ones in France and Europe (but in less precise terms)…

[3] Ch. Vicenty: Obviously, communication problems or difficulties of Chinese establishment exist in Pakistan (also subject to increasing public debt), particularly in the Balochistan region (South-West of the country, with part of it in South-East Iran, and Quetta, Gwadar, Chabahar as main cities or ports), but China has support and various means, locally, not to prevent progress (about 30% of Chinese work plans on the Sino-Pakistan Corridor (C.P.E.C.) would already be completed).

[4] Ch. Vicenty: In terms of disrupting international specialisation, everything will in fact depend on whether the export products mentioned (Airbus, Renault, etc.) will appropriate the current disruptive technologies on which China is already investing massively… If Airbus, Renault… succeed in following and above all anticipating by investing massively in these disruptive technologies (electric aircraft of the future, etc.), they will surely have a chance of surviving the Chinese autonomous and electric vehicles or the Chinese C 919 medium-haul aircraft that China will put into commercial service from 2021 (able to compete at half price for a similar quality with the equivalent AIRBUS and BOEING aircraft)… Otherwise, Indeed, European and Western foreign trade could suffer from structural imbalances that are even more acute than at present, with technological know-how for the manufacture of high-quality and competitive finished products becoming once again the privilege of the eastern and Asian part of the current and future world, as before the European Renaissance from the end of the 15th century with partial extensions until around 1820…

[5] Ch. Vicenty: indeed, and despite all the defects that the Western media attribute to it, rightly or wrongly, the Chinese regime is gradually evolving towards a “hybrid authoritarianism” where “public and private” coexist, or even reinforce each other over time, even if the Western media rarely make a detailed analysis of them and at a argued, “dispassionate” level of epidermal ideological preconceptions… see links – https://arretsurinfo.ch/le-socialisme-capitaliste-chinois-est-il-ce-que-lavenir-nous-reserve/, https://www.legrandsoir.info/le-socialisme-chinois-et-le-mythe-de-la-fin-de-l-histoire.html, https://reseauinternational.net/le-modele-gagnant-gagnant-du-socialisme-de-marche-chinois-desarconne-les-capitalistes-occidentaux-comme-les-communistes/, http://institut-thomas-more.org/2018/07/12/le-parti-communiste-chinois-une-avant-garde-pour-lhumanite/.

[6] Ch. Vicenty: a network developed step by step, over time, and in a multimodal way, probably largely by China, including at the virtual level (e-commerce, optical fibre, advanced electronic payments, etc.), in accordance with the African Agenda for 2063, signed in 2013 on the occasion of the 50th anniversary of the OAU. (https://au.int/fr/agenda2063/vue-ensemble).

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